The Lowdown on Southwest Airlines New Rewards Program

Wanna get away? If you’re planning to use your Southwest Airlines Rapid Rewards Credit Card to pay for a getaway after March 1, you’d better check the details of the All-New Rapid Rewards program. Southwest Airlines is overhauling its Rapid Rewards program and the changes are effective on March 1, 2011. Ryan Green, Senior Director of Customer Loyalty and Partnerships, writes in his blog that cardholders should be on the lookout for information that will be sent directly to them.

But you can get the details right now by visiting NewRapidRewards.com. The landing page starts with a video introduction and then you get a nifty graphic listing what’s changed. The current program uses a combination of Reward Dollars and bonus credits. Southwest is converting to a point system, but you won’t lose your existing credits. Check out the second part of the graphic, “What About My Credits & Awards,” and you’ll find a credit-to-point conversion table.

Southwest is based in Texas and known for its low-cost domestic airfares. The new point system will be based on the cost of flights as opposed to the number of flights taken. This move seems designed to attract the business traveler, who typically can spend more for travel.

No matter how they try to spin this, it looks like a move to encourage consumers to spend more on airfare. But honestly, there are some things to like about the new Rapid Rewards program. Southwest has done away with blackouts. And your points won’t expire, which is a huge improvement over the previous program. Plus, you’ll be able to redeem points for international flights.

If you’re a current cardholder, take the time to read over the details so you can decide if this is still the right frequent flyer program for you. Those who travel for leisure and count on a low-cost flight to rack up points need to think about it carefully. Although some of you, especially those who travel for business, might find the new program goes further to meet your needs.

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A consumer advocate, Beverly Blair Harzog focuses on credit card issues and provides insight about current news that affects the credit card industry and consumers. She's a nationally recognized expert on credit card issues and is also the co-author of Confessions of a Credit Junkie. Visit Beverly at BeverlyHarzog.com.

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cfsf

This is a major downgrade to Rapid Rewards for frequent short-haul travelers, who probably represent most of Southwest’s frequent fliers.

Until now, you could spend less than $1000 for 8 cheap (“Wanna Get Away”) short-distance round-trips within 2 years (I’ve flown several such flights recently for round-trip fares ranging from $80 to $140), and then you would get a free round trip *anywhere*. Many destinations cost $400-500 per round-trip even with the cheapest web-only fares. So you could easily spend around $1000 (potentially as little as $650) and then get a $400 trip free.

Now (assuming you don’t have lots of money to waste on expensive “Anytime” or Business fares), if you spend $1000, you’ll get a free trip worth exactly $100.

Of course, Southwest trumpets all the improvements and most reporters parrot them. I’ve read many news items about this, and only one, in a little Baltimore paper (http://bit.ly/fDw14q), described what I’ve pointed out here, which is probably the most typical actual effect of the changes. Boo Southwest. Boo reporters!

Beverly Blair Harzog

Thanks for your comment. Well, I think I understand your frustration. The focus of the program is shifting away from what’s been their target market all these years. The new rewards program is courting the business traveler, who will spend more dollars. As I pointed out at the end, if you travel for leisure and liked racking up points with low airfare, you need to reconsider if this is the right card for you. I can see you’ve already done that!

http://gtfowler@gmail.com Gail

Are they saying dollars spent using my Southwest Visa will no longer get me credits for domestic flights on Southwest Airlines?

cfsf

FWIW, I thought your article was fairer than most, and I appreciate your sympathetic reply to my comment. Still, your attitude seemed to be, well, this is good in some ways and bad in others, which strictly speaking is true. But when the typical value of reward credits (i.e. the amount you could save on a reward after spending a given amount of money on flights) is cut to roughly one QUARTER of what it was before, the other little enhancements (no blackout dates, no expiration), while they’re admittedly an improvement on those aspects of the old program, hardly balance the HUGE devaluation of their rewards.

I don’t fault Southwest for making this change – truly, their rewards were amazingly good in the old program, and it was hard to understand how they could afford them. I only fault them, and most reporters, for spinning this huge devaluation of their rewards as some kind of wonderful new program that might actually be better for most people.

If you’re someone who typically flew at least 4 long-haul, round-trip flights per year and didn’t ever take shorter flights, or if you flew less than 4 trips/year, this program will probably be better for you because of the various little improvements. But if, like most flyers, you also (or primarily) take short flights, this program will give you much less value than the old one. Fine, if they can’t afford to hand out lavish rewards any more, just say so, but don’t try to sell it as “new and improved”!

Gail–They’re converting to a point system, but you won’t lose the credits you already have. The details, along with a credit-to-point conversion table, is on http://www.NewRapidRewards.com.

The new program is based on how much you spend on flights as opposed to how frequently you fly. It really reaches out more to the business traveler since they typically spend more on airfare.

DC

I switched from flying United on domestic flights to SW a few years ago even though I am business traveler with UA premier exec status for life (Million Mile Club). Looks like SW just did United a BIG FAVOR. I’ll give my money to UA and take the first class upgrades as a bonus. Nice going Gary……

RH

If a person flies the same itinerary all the time, the new program gives one free trip per ten paid trips, a 9% discount for loyal customers. The old program gave 1 per 8 paid trips at worst, and even without working to game the system, normal variation in flight costs would allow a frequent flyer to get a 15% to 20% discount.

The credit card portion of the program is also reduced in value. The old program provided a domestic round-trip per 19,200 dollars spent, better than “major” airline programs which were nominally one per 20,000 or 25,000 dollars. The new program is more similar to a 1% rebate, payable in the form of free tickets. And while other airline programs either allow annual fees to be waived or return substantial value (such as a free or $99 companion ticket), the new Southwest program returns 2400 points, worth $24 toward the next frequent flyer ticket.

I estimate that the changes in the aggregate will save Southwest between 30 and 40% of its annual loyalty program costs. That savings comes primarily at the expense of the typical Southwest frequent flyers.

Hmmm….Gary Kelly, Southwest chief honcho is a clever bean counter (accountant) who is playing fast and loss with the sales lingo. For instance, “doing away with Blackout dates.” This hasn’t been the problem, the probelm was his decision to allocate limited Reward Seat while having open “Freedom Seats” which required double rewards. Now he is replacing the the Freedom Reward with higher prices. Blackouts were less the problem than patrons who saw thru Gary’s Freedom Awards which should have been named ” Lost Freedom” Awards.

Beverly Blair Harzog

dwil–Good point regarding the blackout dates.

RH–Thanks for taking the time to share those numbers. I fly out of Atlanta so I’m not a Southwest customer or cardholder. I love getting the perspective of the consumers who are actually being affected by these changes. The new program is definitely geared toward the business frequent flyer.

Chuck

The big lose with the new program is the loss of the companion pass. That stinks.

dfwperson

Southwest has actually devalued their flights considerably, actually point for point, they have now moved American Airlines to the front of the line for the most generous awards program. You can fly anytime any flight on American for 50K, if there is no 25K award available. On Southwest, they have now made it to where some of their so-called any flight would cost up to 100K miles, seems double price to me. Consider that on their “wanna get away fare to OKC from Dallas at $39 X 6 points =234 points for this flight. Now if you want to fly to say LAS from Dallas at the last minute, now could cost upwards of 48K milers each way for a total of 96K for ONE roundtrip ticket. Compare to AA for 50K any ticket anytime, but a lot available, even last minute at 25K. Plus if all you fly is the cheap routes it would now take 41 one way trips for ONE free ticket. WOW——-By the way they are KEEPing the Companion pass, the only good thing they are keeping along with lowering the restriction for A list, which will allow More people in that list, crowding the current ones more. Keep in mind Southwest does not offer the lower fares one to two weeks out, so any last minute trips will require business select or anytime at the higher rate of 120 or 100 per dollar.

L. Williams

If they are trying to appeal to more business customers, then they better up their game. Wider seats, more ammeniities, in-flight wi-fi, TVs in the seats, etc…I fly Southwest because it is cheap, so I do not complain about the tiny seats and the ridiculous seating game. Now, I will be forced to choose between other carriers. JetBlue is by far better just for the inflight comfort on the cheap. If I am looking for the best airline program, I will have to check out American based on what was stated in this thread.

PWS

Just yesterday I had a last minute change to my plans and flying out earlier in the day worked better for a trip just a few days away. I was flying on a free SW ticket and sure enough they had seats available on the earlier fight so I just switched my reservation. The ability to do this is one of the things I loved about SW. Now however, if I were to do that there would be a substantial increase in the cost using the new points due to it being within a week. My options now would be to look for a cheap fare on another airlines and cancel my SW flight. So sad.

Beverly Blair Harzog

I really appreciate the thoughts that you’ve all shared here. I’ve yet to hear from someone who thinks these changes are in any way a good thing for consumers.

L. Wlliams–That’s a good point about tiny seats and business flyers. Perhaps they’re hoping to bring in small business owners with limited cash flow rather than the more affluent crowd.

At any rate, I’ll be following this story and doing another blog about this as we get closer to March 1. So stay tuned and keep your thoughts coming!

the traveling emergency manager

After flying with SW for the past 7 years and enjoying the “freedom” of traveling the western US for business and back east for conferences, My company (who does an excess of $500K+ in SW business) did a cost benefit of continuing with SW and their new point system. It was found that we would be losing $$ with this program. It’s a shame, we really like flying SW.

We have opened a business account with United as well. I have heard that FEMA will be doing the same.

Mike from Las Vegas

As a 30 year A-List, Companion Pass traveler with SWA, I’m more than disappointed that SW chose to follow the Majors into FF “devaluation land”. The current program was easy to understand, easy to administer and easy to redeem.

Beverly Blair Harzog

I hear you, Mike. I’ve written a new blog about this subject since the changes take effect tomorrow. So be on the lookout for it this afternoon.

I agree that the new Rapid Rewards aren’t as easy to understand. Southwest appears to be courting the business flyer. A lucrative market, to be sure. But as a few astute posters here have pointed out, the new program doesn’t do enough to position them well with the business flyers.

Craig

I found that I lost most of my accumulated flight segments required for the SWA A-List going from just 3 flights required to achieve their A-List to only 24% of required flights? This new program is not working for me.

Darrell

I travel on SW weekly and found the prior program matched my short-haul travel. Loved the ability to not have to long on to a website to figure out how many flights until a free flight. Simple in a complex world. Now its mystery meat. You rely on price. If that is the case then post the table. There is another item. The free tickets are calculated based upon where you want to go. They even have a graphical slider to show you based on points where you can travel.
Ok Gary even AA doesn’t discriminate on travel within the US. Yes they have blackouts sure, but looking at a map and charging more points because the mileage is 500 miles more from the destination. As a business flyer this isn’t working for me either. My loyalty to SWA is gone. SWA has gone mainstream.

joel

I am so disappointed, I previously had 11 flights, so i had earned a free flight, but for some reason the site did not have that free flight info before you changed the rules. So I figured it was just a glitch since you were working on a new program and I decided to wait until you updated your site. Now it says I need 16 flights for one free one, This is not fair at all!!

Southwest has just become AA and Continental. Next…they will have 1st Class seats. Shame shame shame. the only thing that really sucks about it however is…they are trying to tell me IT’S THE SAME…WE JUST USE POINTS INSTEAD OF FLIGHT CREDITS. The problem is….A round trip flight to Dallas to Houston got me 2 credits. 1/8 of what I need to fly to LA. Now. Dallas to Houston wouldn’t come close to getting me to LA in 8 flights. So stop patronizing me and telling me it’s the same…when the actuality is…if you have money to pay more for flights, you will get more in return. The perfect analogy of “Rich get richer, poor get poorer….”

okima hitt

Totally disappointing! I’ve been flying SW for years between NY and IL to see my kids who are both in college in Chicago and for business. I was due for a free flight when the rules changed and lost all of my credit. I’ve never flown Jet Blue, but will be looking to them first for my next trip.

Beverly Blair Harzog

Well, that is a shame. You might call and ask if they can work out something for you. Let them know how loyal you’ve been and how you’ve relied on SW to see your kids. If that doesn’t get you anywhere, there are plenty of airline cards as well as travel cards that might meet your needs. At the moment, there are some really good sign-up bonuses out there, some including a free ticket.

Jan

I haven’t flown SWA since they changed to the points system. What I really hate is that Business Travellers can get big points when travelling on their Company’s nickel and have a bunch of points to spend on the “cheap seats.” If SWA wanted to make it fair, the Bus Points should have to be spent on Business seats. The Bus traveller is flush with points to compete for the cheap seats. Not fair SWA, not fair.

duncan a mcpherson

What am I missing? Chase Saphire just offered me 50,000 points to sign up with them.
Chase SWA, my existing card, offers next to nothing to stay with them. It appears I am better off to cancel my SWA chase. I have superb credit. Eventually SWA or someone else, will offer a meaningful incentive to get my business. Why don’t reporters report on this industry practice? Who’s interests do reporters represent?

Beverly Harzog

Hi Duncan–The problem is that these great offers are for new cardholders, right? I know that’s frustrating and I agree the new SWA rewards program leaves a lot to be desired for existing cardholders. It’s really a better fit for the business traveler.

You ask who interests reporters represent. That depends on the pub/website, frankly. But my goal is to be a consumer advocate. If there’s something you’d like to know, ask away!

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